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PETITIONER: HINDUSTAN STEEL LTD.

       Vs.

RESPONDENT: THE PRESIDING OFFICER, LABOUR COURT, ORISSA AND ORS.

DATE OF JUDGMENT15/09/1976

BENCH: GUPTA, A.C. BENCH: GUPTA, A.C. CHANDRACHUD, Y.V. GOSWAMI, P.K.

CITATION:  1977 AIR   31            1977 SCR  (1) 586  1976 SCC  (4) 222  CITATOR INFO :  F          1980 SC1219  (12,13)  RF         1980 SC1896  (153)  RF         1981 SC 422  (3)  RF         1981 SC1253  (8)  E          1982 SC 854  (5,6)  D          1983 SC 865  (6)  R          1983 SC1320  (8,9,11)  R          1984 SC 500  (2)  E          1990 SC1808  (5)

ACT:             Industrial  Disputes  Act 1947--Sec.  2(00)--Meaning  of         retrenchment---Can termination of service by efflux of  time         covered by the expression retrenchment.

HEADNOTE:           The  respondents were employed as Head Time Keepers for  a         period of 3 years.  Pursuant to an alleged policy to stream-         line  the  organisation  and to  affect  economies  wherever         possible, the appellant chose not to renew the contracts  of         service of the Head Time Keepers.  There was no order termi-         nating  their  services.   According to  the  appellant  the         termination  was automatic on the expiry of the  contractual         period  of  service.  The respondents raised  an  industrial         disputs  which was referred by the Government of  Orissa  to         the  Labour  Court. The Labour Court vacated the  orders  of         termination  and held that they were entitled to  reinstate-         ment  with continuity of service and full back  wages.   The         Labour Court came to the conclusion:                     (1) that the respondents were retrenched without                  complying with the provisions of section 25F of the                  Industrial  Disputes Act and, therefore,  retrench-                  ment was contrary to law.                     (2)  The termination was as a result  of  unfair                  labour  practice adopted by the appellant  employer                  and was not bonafide.                     (3)  It was not proved that the respondents  had                  alternative  employment  after they  were  released                  from service.             The  appellant  challenged the award by  filing  a  Writ         Petition in the Orissa High Court and contended:

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                   (1)  That the services of the, respondents  came                  to  an end by efflux of time and that it was not  a                  case of retrenchment.                     (2)  That it was for the workmen to  prove  that                  they had tried to minimise their losses by  obtain-                  ing employment elsewhere.                     (3)  The  Labour Court erred in  awarding   full                  back    wages   to   the     respondents    without                  satisfying   himself   that they  had  been     em-                  ployed.             The  High  Court over-ruled the  above  contentions  and         dismissed the Writ Petition.             In  an appeal by Special Leave the appellant  contended:         (1 ) that the services of the respondents came to an end  by         efflux of time and that such termination of service did  not         fall within the definition of retrenchment in section  2(00)         of the Industrial Disputes Act.             (2)  That  the  present appeal is  covered  against  the         appellant by the decision of this Court in the case of State         Bank of India v.N. Sundata Money but that the said  decision         was contrary to an earlier decision of a larger Bench in the         case of Hari Prasad Shiv Shankar Shukla.         Dismissing the appeal,             HELD: 1. Section 2(00) which defines retrenchment  makes         it clear that the retrenchment means the termination by  the         employer of service of a workman for any reasons whatsoever.         Under 8. 25F(a) no workman who has been in continuous         587         service for not less than one year under an employer can  be         retrenched  unless he has been given one month’s  notice  or         wages in lieu thereof.  A proviso to s. 25F(a) says that  no         such notice shall be necessary if the retrenchment is  under         an  agreement which specifies a date for the termination  of         service.   The  proviso would be quite  unnecessary  if  the         retrenchment as defined by section 2(00) was intended not to         include termination of service by efflux of time in terms of         an agreement between the parties.  [589B-H, 590A]            2. Hari Prasad Shukla’s case does not run counter to  the         decision  in the case of State Bank of India. In  that  case         what  this  Court held was that  termination of  service  on         account  of the cessation of the industry itself in a  bona-         fide  closure or discontinuance of his business by  the  em-         ployer does not amount to retrenchment-  [590B-E]           State  Bank of India v.N. Sundara Money; 1976(3)  SCR  and         Pipraich  Sugar Mills Ltd. v. Pipraich Sugar  Mills  Mazdoor         Union [1956] S.C.R. 872 ; followed            Hariprasad  Shivashankar Shukla v. A.D.  Divikar,  [1957]         S.C.R. 121; explained.           3. In the Writ petition filed by the appellant in the High         Court  the finding that the respondents had  no  alternative         employment  was not challenged.  The question of  mitigation         of  loss was not raised before the Labour Court.   The  High         Court,  therefore,  rightly refrained  from  exercising  its         discretionary jurisdiction in favour of the employer.   [590         G-H, 591A-B]

JUDGMENT:           CIVIL  APPELLATE  JURSDICTION: Civil Appeal  No.  1580  of         1970.           Appeal  by  Special Leave from the   Judgment  and   Order         dated 14-8-69 of the Orissa High Court in O.J.C. No. 21/65.           L.N. Sinha, Sol. Genl. of India, Santosh Chatterjee,  G.S.         Chatterjee and D.P. Mukherjee; for the Appellant.

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             P.S. Khera; for Respondent No. 4.           Gobind  Das,  (Mrs.) S. Bhandare,  M.S.  Narasimhan,  A.K.         Mathur and   A.K. Sharma; for Respondent No. 5.             B.P. Singh and A.K. Srivastava; for Respondent No. 6.          The Judgment of the Court was delivered by          GUPTA, J. Respondents Nos. 3, 4 and 5 had been employed as          Head  Time Keepers in the Rourkela Unit of Hindustan  Steel         Limited,  appellant  herein.  The third and the  fourth  re-         spondents were appointed on September 24, 1959 and September         14,  1959 respectively, each  for a period of  three  years.         The  fifth  respondent was also appointed  for a  period  of         three years from July 15, 1957 but as Time Keeper, not  Head         Time Keeper.  In his case the period was extended after  the         expiry  of  three  years  from time  to  time  till  October         15,1962.  In  the  meantime he had been promoted  from  Time         Keeper  to  Head Time  Keeper with effect from  November  3,         1960.  Pursuant  to an alleged  policy  to  "streamline  the         organisation  and to effect economies  wherever   possible",         the  appellant chose not to renew the contracts  of  service         the  Head  Time Keepers who were eight in  number  including         these  three  respondents.  There was no  order  terminating         their  services;          6---1234SCI/76         588         according to the appellant the termination was automatic  on         the expiry of the contractual period of service.  The afore-         said three respondents raised an industrial dispute  through         their Union, respondent No. 6, Rourkela Mazdoor Sabha.   The         dispute whether the termination of the services of the three         respondents  was justified and, if not, to what relief  they         were entitled, was referred by the Government of Orissa  for         adjudication  to  the Labour Court of  Orissa,  Bhubaneswar.         The Presiding Officer of the Labour Court by his award dated         December 12, 1964 vacated the orders of  termination  passed         against  these  three respondents and held  that  they  were         entitled to "reinstatement  with continuity of service"  and         also to "full wages for the period between the date of their         release  from service and the  date or dates of their  rein-         statement".  The award is based on the following findings:                      (i)  the three respondents had been  retrenched                  from  employment, and the requirements  of  section                  25F of the Industrial Disputes Act not having  been                  satisfied, the retrenchment was contrary to law;                      (ii)  in  terminating the   services  of  these                  employees the management had adopted unfair  labour                  practice  and  the action of the employer  was  not                  bonafide;  and that.                     (iii)  it had not been proved that they had  any                  alternative  employment  after they  were  released                  from service.         The appellant challenged the award by filing a writ petition         in the Orissa High Court.  It was contended before the  High         Court  that the services of these employees had come to  end         by  efflux of time, that the management had  not  terminated         their services and as such these were not cases of retrench-         ment.   Another submission made on behalf of the  management         was that the employees not having proved that they had  made         efforts  to  minimize  their losses during  the  period   of         unemployment,  the award for payment of full back wages  was         erroneous,   The High Court overruled both  the  contentions         and  dismissed the writ petition. In this appeal by  special         leave  the appellant questions the correctness of the  deci-         sion of the High Court.             The  main question in this appeal is whether  the  three         respondents  had been retrenched by their employer as  found

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       by  the Labour Court. If these were cases  of  retrenchment,         the  order  of reinstatement made by the  Labour  Court  was         obviously  a  valid  order as,  admittedly,   the  condition         precedent  to  the  retrenchment of workmen  laid  down   in         section  25F  of the Industrial Disputes Act  had  not  been         satisfied. The contention raised on behalf of the  appellant         both here and in the High Court was that the services of the         three respondents came to an end by efflux of time and  that         such termination of service did not fall within the  defini-         tion  of  retrenchment in section 2(00)  of  the  Industrial         Disputes  Act.   The  Solicitor General  appearing  for  the         appellant frankly conceded that this appeal was covered by a         recent  decision  of this Court, State Bank  of  India  v.N.         Sundara Money,(1) and the decision         1976(3) S.C.R.         589         was  against  the contention of the appellant.   He  however         submitted  that this decision which was rendered by a  Bench         of  three  Judges was in apparent conflict with  an  earlier         decision of this Court, Hariprasad Shivshankar Shukla v.A.D.         Divikar,  (1) which was by a larger Bench and  that  Sundarn         Money’s case therefore required reconsideration.             Retrenchment  has, been defined in section 2(00) of  the         Industrial Disputes Act as follows:                        "2.  (00). "retrenchment" means the  termina-                  tion  by the employer of the service of  a  workman                  for  any  reason whatsoever, otherwise  than  as  a                  punishment  inflicted by away of  disciplinary  ac-                  tion, but does not include--                  (a) voluntary retirement of the workman; or                      (b)  retirement of the workman on reaching  the                  age of superannuation if the contract of employment                  between  the  employer and  the  workman  concerned                  contains a stipulation in that behalf; or                      (c)  termination of the  service of a   workman                  on the ground of continued ill-health;"         Analysing  this definition in State Bank of India v.N.  Sun-         darn Money, (supra) this Court held:                        "Termination.. for any reason whatsoever  are                  the key words.  Whatever the reason, every termina-                  tion  spells retrenchment. So the sole question  is                  has  the employee’s service been terminated ? ..  A                  termination takes place where a term expires either                  by the active step of the master or the running out                  of the stipulated term  .....  Termination embraces                  not merely the act of termination by the  employer,                  but the fact of termination howsoever produced.                        ......  an employer terminates employment not                  merely by passing an order as the service runs.  He                  can,  .do  so  by writing a  composite  order,  one                  giving employment and the other ending or  limiting                  it.   A separate, subsequent determination  is  not                  the sole magnetic pull of the provision. A  preemp-                  tive  provision to terminate is struck by the  same                  vice as the post-appointment termination."         This  decision, as conceded by the Solicitor  General,  goes         against the contention of the appellant and is conclusive on         the  main  question that arises for  consideration  in  this         appeal.  It may also be noted that section 25F(a) which lays         down that no workman who has been in continuous service  for         not less than one year under an employer shall be retrenched         by that employer unless he has been given one month’s notice         or  wages in lieu of such notice, has a proviso  which  says         that "no such notice shall be necessary if the  retrenchment         is under an agreement which specifies a date for the  termi-

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       nation of  service".         (1) [1957] S.C.R. 121.         590         Clearly,  the  proviso would have been  quite  necessary  if         retrenchment as defined in section 2(00) was intended not to         include termination of service by efflux of time in terms of         an  agreement between the parties. This is one  more  reason         why  it  must  be held that the Labour Court  was  right  in         taking  the view that the respondents were  retrenched  con-         trary to the provisions of section 25F.             In Hariprasad Shivshankar Shukla v.A.D. Divikar, (supra)         to  which the Solicitor General referred, one of  the  ques-         tions that arose for decision was whether the definition  of         retrenchment  in section 2(00) goes "so far beyond  the  ac-         cepted notion of retrenchment as to include the  termination         of service of all workmen in an industry  when  the industry         itself ceases to exist on a bonafide closure or  discontinu-         ance  of his business by the employer ?"  The  question  was         answered in the negative on the authority of an even earlier         case,  Pipraich  Sugar Mills Ltd. v.  Pipraich  Sugar  Mills         Mazdoor  Union,(1)  which  held  that "retrenchment connotes         in  its  ordinary acceptation that the  business  itself  is         being continued but that a portion of the stall or the force         is discharged as surplusage and the termination of  services         of  all the workmen as a result of the closure of the  busi-         ness cannot therefore     be properly described as retrench-         ment".   Following  Pipraich  Sugar Mills’ case it was  held         in  Hariprasad Shivshankar Shukla v. A. D.  Divikar  (supra)         that  the  words  "for any reason whatsoever"  used  in  the         definition would not include a bonafide closure of the whole         business  because "it would be against the entire scheme  of         the Act to give the definition clause relating to  retrench-         ment  such a meaning as would include within the  definition         termination  of service of all workmen by the employer  when         the  business itself ceases to exist".  On the facts of  the         case  before us,  giving full effect to the words  "for  any         reason  whatsoever" would be consistent with the  scope  and         purpose  of section 25F of the Industrial Disputes Act,  and         not  contrary  to  the scheme of the Act.  We  do  not  find         anything  in  Hariprasad’s case which is  inconsistent  with         what has been held in State Bank of India v.N. Sundara Money         (supra).             Another  point made on behalf of the appellant was  that         the  Presiding  Officer  of the Labour Court  was  wrong  in         awarding full back wages to the respondents without satisfy-         ing  himself that they had been unemployed after  they  were         released  from service by the appellant and,  further,  that         they had taken all reasonable steps to mitigate their losses         consequent  on  their retrenchment.  The  Labour  Court  has         found  that it had not been proved that the respondents  had         any  alternative employment.  In the writ petition filed  by         the  appellant in the High Court, the finding that  the  re-         spondents had no alternative employment was not  challenged.         From  the  judgment of the High Court it  appears  that  the         submission  on the propriety of awarding full back wages  to         the respondents was confined to the ground that the respond-         ents  had not proved that they had tried to  mitigate  their         losses  during the period of unemployment.  In  the  special         leave  petition  also what has been urged is that  the  High         Court  should have held that the respondents were not  enti-         tled  to  full back wages unless they succeeded  in  proving         that they         (1) [1956] S.C.R. 872.         591         tried  to  secure alternative employment  but  failed.   The

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       Labour  Court awarded full back wages to the respondents  on         the  finding  that they had been illegally  retrenched.   It         does not appear that the question of mitigation of loss  for         deprivation of employment had at all been raised before  the         Labour  Court.   The  High Court  therefore  refrained  from         exercising its "discretionary jurisdiction in favour of  the         employer"  and proposed not to "deprive the workmen  of  the         benefit  they  had been found entitled to by  the  Presiding         Officer".   That the respondents were unemployed cannot  now         be  disputed.   In these circumstances the  High  Court  was         justified, in our opinion, in refusing to interfere on  this         point.               The appeal fails and is dismissed with costs.         P.H.P.                                    Appeal dismissed.         592